Correlation Between Imperial Metals and Jiangxi Copper

Can any of the company-specific risk be diversified away by investing in both Imperial Metals and Jiangxi Copper at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Imperial Metals and Jiangxi Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Imperial Metals and Jiangxi Copper, you can compare the effects of market volatilities on Imperial Metals and Jiangxi Copper and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Imperial Metals with a short position of Jiangxi Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Metals and Jiangxi Copper.

Diversification Opportunities for Imperial Metals and Jiangxi Copper

0.05

Correlation Coefficient

Imperial Metals  Jiangxi Copper

Significant diversification

The 3 months correlation between Imperial and Jiangxi is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Metals and Jiangxi Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Copper and Imperial Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Imperial Metals are associated (or correlated) with Jiangxi Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Copper has no effect on the direction of Imperial Metals i.e., Imperial Metals and Jiangxi Copper go up and down completely randomly.

Pair Corralation between Imperial Metals and Jiangxi Copper

Assuming the 90 days horizon Imperial Metals is expected to generate 3.26 times less return on investment than Jiangxi Copper. But when comparing it to its historical volatility, Imperial Metals is 1.69 times less risky than Jiangxi Copper. It trades about 0.02 of its potential returns per unit of risk. Jiangxi Copper is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Jiangxi Copper on September 20, 2024 and sell it today you would earn a total of  17.00  from holding Jiangxi Copper or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.69%
Values	Daily Returns

Imperial Metals  vs.  Jiangxi Copper

Imperial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Jiangxi Copper

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Copper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jiangxi Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Imperial Metals and Jiangxi Copper

The main advantage of trading using opposite Imperial Metals and Jiangxi Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Metals position performs unexpectedly, Jiangxi Copper can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Jiangxi Copper will offset losses from the drop in Jiangxi Copper's long position.

The idea behind Imperial Metals and Jiangxi Copper pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.